The National Association of Realtors (NAR) once again slashed its forecast for U.S. home sales for this year, saying sales remain "sluggish" and the economy will grow at a "subpar pace" in 2007.
The NAR projects existing home sales will fall 4.6 percent this year to 6.18 million units. That's a big downward adjustment from its previous forecast of a 2.9 percent decline.
New home sales, though, are taking an even bigger hit. The NAR predicts new home sales will plunge 18.2 percent to 860,000 units this year, compared to its previous forecast of a 17.8 percent drop.
"Overall housing levels are historically strong, but sales remain sluggish compared to the recent boom," Lawrence Yun, NAR senior economist, said in a statement.
Ever the cheerleader for the industry, the NAR's Yun added, "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year. It's important to keep in mind that all real estate is local, and many markets are expected to have higher sales and strengthening prices during the second half of this year."
However, the NAR admits that home prices will fall in 2007. For existing home sales, it will mark the first drop in home prices since the NAR began keeping records in 1960, making this the worst housing market in over four decades!
The median existing home price is expected to fall 1.3 percent to $219,100 in 2007, and the median new home price is forecast to fall 2.3 percent to $240,800.
And though few at the Fed will concede it, even the NAR says the slumping housing market will feed into a slowing economy.
"Because of reductions in home sales and new home construction, the economy will expand at a subpar pace in 2007," said Yun. According to Bloomberg, the NAR predicts the sluggish housing market will shave a full percentage point off U.S. GDP.
If you read between the lines of the NAR's spin doctoring, you can clearly see that the housing boom of recent years has clearly gone bust and the worst is not yet here.